Federalismo e a União Monetária Brasileira
Keywords:
federalism, monetary union, macroeconomic stability, resouces allocationAbstract
Federalism is a political system that can potentially preserve markets and thrive wealth. For federalism to reduce encroachment of government on markets it is necessary to impose hard budget constraints on each level of government. It is shown that if budget constraints are hard, in addition to the conditions met in Tiebout (1956), competition among units of government can improve resource allocation and allow for macroeconomic stability. The existence of hard budget constraints on lower level governments of Brazilian federalism is discussed, and some policy reforms are suggested.
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